TORONTO, CANADA — February 7, 2019 — Russel Metals Inc. (RUS – TSX) announces continued solid
financial results for the 2018 fourth quarter and for the year ended December 31, 2018.
Three Months Ended
2018 2017 2018 2017
Revenues $ 1,115 $ 825 $ 4,165 $ 3,296
EBIT 1 $ 71 $ 47 $ 331 $ 206
Net Income $ 46 $ 28 $ 219 $ 124
Earnings per Share $ 0.74 $ 0.45 $ 3.53 $ 2.00
Free Cash Flow 1 $ 61 $ 30 $ 300 $ 180
Dividends paid per common share $ 0.38 $ 0.38 $ 1.52 $ 1.52
Return on Equity 22% 15%
All amounts are reported in millions of Canadian dollars except per share figures, which are in Canadian dollars
1 EBIT, Free Cash Flow and Return on Equity are non-GAAP measures. EBIT represents earnings before interest and taxes.
Free cash flow represents cash from operating activities before change in working capital less capital expenditures. Return on
equity represents net income divided by shareholders’ equity at period end.
For the year ended December 31, 2018, we reported stellar results in all three of our operating segments.
Net income of $219 million or $3.53 per share on revenues of $4.2 billion was almost $100 million higher
than the comparable 2017 net income of $124 million or $2.00 per share on revenue of $3.3 billion. Net
income for the 2018 fourth quarter was $46 million or $0.74 per share on revenues of $1.1 billion. These
results compare to the net income of $28 million or $0.45 per share in the 2017 fourth quarter.
Revenues in our metals service centers increased 25% to $524 million for the quarter compared to the
same period in 2017 due to increased price per ton. Steel price increases and continued growth in valueadded processing resulted in a 28% improvement in the average selling price over the fourth quarter of
2017. Gross margins were 20.9% compared to 19.3% in the fourth quarter of 2017. Operating profits of
$28 million were 80% higher than the $16 million reported in the same quarter in 2017.
Revenues in our energy products segment increased 44% to $432 million compared to $300 million in the 2017 fourth quarter. Revenues increased primarily due to U.S. line pipe projects and higher oil field service store activity. Gross margin as a percentage of revenues was 17.8% consistent with the 2018 third quarter and compared to 21.3% in the same quarter last year due to lower margins on the large U.S. line pipe projects. This segment had operating profits of $33 million compared to $28 million in the same quarter last year. Revenues in our steel distributors segment increased by 50% to $157 million compared to $104 million in the 2017 fourth quarter due to higher steel prices and stronger demand. Gross margins as a percentage of revenues were 13.3% compared to 14.9% due to product mix. Operating profits were $11 million compared to $8 million in the 2017 fourth quarter. Mr. John G. Reid, President and CEO, commented, “We are extremely pleased with the excellent results in 2018 and would like to commend all our operations for their tremendous execution during the fourth quarter and throughout the year. Our strong earnings were a result of their ability to utilize local market knowledge to react quickly to the changing environment. In addition, growth in both our value-added processing and our U.S. energy field stores and our distributor’s ability to source product through international trade expertise greatly contributed to our outstanding year.” Mr. Reid continued, “Although steel prices are still at healthy levels to date in 2019, they are experiencing
some downward pricing pressure. Specifically, flat rolled prices are lower as scrap prices have fallen and import spreads offer attractive opportunities as quotas reset. Plate continues to be the strongest North American product due to strong demand levels. The energy market is seeing a modest pull-back in capital spending due to reduced oil prices. For the first quarter, we expect stable demand with pressure on steel prices.” The Board of Directors approved a quarterly dividend of $0.38 per common share payable March 15, 2019 to shareholders of record as of February 27, 2019. The Company will be holding an Investor Conference Call on Friday, February 8, 2019 at 9:00 a.m. ET to review its 2018 fourth quarter results. The dial-in telephone numbers for the call are 416-764-8688 (Toronto and International callers) and 1-888-390-0546 (U.S. and Canada). Please dial in 10 minutes prior to the call to ensure that you get a line. A replay of the call will be available at 416-764-8677 (Toronto and International callers) and 1-888-390- 0541 (U.S. and Canada) until midnight, Friday, February 22, 2019. You will be required to enter pass code 140202# to access the call. Additional supplemental financial information is available in our investor conference call package located on our website at www.russelmetals.com. Russel Metals is one of the largest metals distribution companies in North America. It carries on business in three metals distribution segments: metals service centers, energy products and steel distributors, under various names including Russel Metals, A.J. Forsyth, Acier Leroux, Acier Loubier, Acier Wirth, Alberta Industrial Metals, Apex Distribution, Apex Monarch, Apex Remington, Apex Valve Services, Apex Western Fiberglass, Arrow Steel Processors, B&T Steel, Baldwin International, Color Steels, Comco Pipe and Supply, Couleur Aciers, DuBose Steel, Fedmet Tubulars, JMS Russel Metals, Leroux Steel, Mégantic Métal, Métaux Russel, Métaux Russel Produits Spécialisés, Milspec, Norton Metals, Pemco Steel, Pioneer Pipe, Russel Metals Processing, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Spartan Energy Tubulars, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.